An order under S. 33 of the Insurance Act, 1938 can be passed against an insurer who has closed all classes of its insurance business, and the security deposit made by an insurer under S. 7 of the Act cannot be taken into account in determining whether the insurer's liabilities have been satisfied or otherwise provided for, for the purposes of S. 2D of the Act.

Judgment

WANCHOO, J.: This is an appeal on a certificate granted by the Madras High Court. The appellant Company had been carrying on various classes of insurance business other than life insurance after its incorporation in September 1941. On October 15, 1956, an extraordinary general meeting of the shareholders of the Company passed a resolution by which all its insurance business was to cease forthwith and no further policies of insurance of any kind were to be issued thereafter, It was also resolved that no application should be made for renewal of the certificate granted under S. 3 of the Insurance Act No. IV of 1938, (hereinafter called the Act) and that thenceforward the Company should only carry on the business of money-leading as a loan-company and also to do investment business. In consequence of these resolutions, the Company informed the Controller of Insurance in December 1956 that it was not applying for renewal of its registration for carrying on the business of insurance. In May 1957, the Controller wrote to the Company that its certificates for carrying on insurance business would be deemed to be cancelled from July 1, 1957, and the cancellation was notified in the Gazette of India.

2. It appears that the Government of India had been receiving complaints against the Company. Consequently on July 17, 1957, the Government of India passed an order under S. 33 of the Act directing the Controller of Insurance to investigate the affairs of the Company and to submit a report. Thereupon the Controller appointed Messrs. Fraser and Ross to act as auditors to assist him in the investigation. The Company was informed of this order in September 1957. Thereupon it wrote to the Controller that no order under S. 33 of the Act could be passed against it, as it had closed its business of insurance and the order in question was without jurisdiction. The Controller sent a reply to this communication and pointed to the provisions of S. 2D of the Act in justification of the order. Thereupon the Company made an application under Art. 226 of the Constitution in the Madras High Court. Two main contentions were raised by it in the petition. In the first place it was submitted that the Company having closed all its insurance business no order could be passed against it under S. 33, as that section only applied to companies actually carrying on the business of insurance and that in any case no such order could be passed even with the help of S. 2D of the Act. In the second place it was contended that even if such an order could be passed under S. 33 read with S. 2D of the Act, it could not be done in the present case, as the Company s liabilities in respect of its insurance business did not remain unsatisfied or not otherwise provided for. Messrs. Fraser and Ross as well as the Controller were made parties to the petition. The petition was opposed on behalf of the Controller, and his contention was that the case was clearly covered by S. 2D of the Act and therefore the order under S. 33 was validly passed in this case and that it had not been shown that the liabilities had been satisfied or had been otherwise provided for.

3. The learned Single Judge held that an order under S.33 read with S.2D could be passed against the Company and that it had not been shown that the Company s liabilities had been satisfied or otherwise provided for. He therefore dismissed the writ petition. This was followed by an appeal by the Company, which was dismissed. The Division Bench substantially agreed with the view taken by the learned Single Judge. Thereupon the Company applied for a certificate to enable it to appeal to this Court obtained it; and that is how the matter has come up before us.

4. Mr. Aggarwala appearing for the Company has urged the same two points before us. The Act was passed in 1938 to control persons carrying on the business of insurance. Section 2 (9) thereof defines an insurer inter alia as meaning any body corporate (not being a pers